Jaitley said defence PSUs and the private sector can have a healthy competition to develop military platforms and weapon systems, asserting that India must not rely heavily on imports

India's military preparedness is the best deterrent which will guarantee peace in the region, Defence minister Arun Jaitley said on Tuesday, adding that India must significantly ramp up its defence production keeping in mind geo-political dynamics.

Jaitley said defence PSUs and the private sector can have a healthy competition to develop military platforms and weapon systems, asserting that India must not rely heavily on imports.

In an oblique reference to Pakistan, Jaitley said security requirements are dictated by the kind of neighbourhood India has.

"Obviously, in view of the peculiar situation from geo-political point of view where we are located, our preparedness is the best deterrent and which is certainly a guarantee for peace as far as our region is concerned," he said.

He was speaking at an event where some of the defence public sector undertakings (DPSUs) were given Raksha Mantri awards for their performance in 2014-15 and 2015-16.

"No country can indefinitely win wars and battles on the strength of trying to buy and import equipment from outside. Its security preparedness would be incomplete if it relies only on that," Jaitley said.

The defence minister referred to the strategic partnership model for involving leading domestic private sector firms along with foreign entities for defence production and said it will encourage defence manufacturing in the country.

Under the strategic partnership model, the government plans to rope in select private firms to build military platforms like submarines and fighter jets in India in partnership with foreign entities.

It aims to create a vibrant defence manufacturing ecosystem in the country through involvement of both the major Indian corporates as well as the MSME sector.

"There is no reason why we cannot become a force to reckon with (in defence production)," he said.

Talking about the economy, Jaitley said it has been logging impressive growth in the last three years.

"Having completed seven decades after Independence, we have now for three years in a row achieved the distinction of being the fastest growing global economy among the major economies. We aspire to evolve from a developing economy to a developed economy," he said.

Jaitley said India must expand its manufacturing sector to create job opportunities on a mass scale.